Hadekel: Blanket ban on engineering, construction firms unfair

Peter Hadekel, Special to The Gazette06.24.2013

An agent from the Competition Bureau enters a building that houses the offices of Dessau, an engineering company in Laval north of Montreal, in November. Dessau has been suspended from bidding on government contracts.

Related

MONTREAL - The hunger for justice is enormous. Quebecers — rightly appalled at the conduct of engineering and construction firms that colluded to defraud the taxpayer — want someone to pay.

But in the rush to judge and condemn, maybe we’re going a little too far with companies like engineering firm Dessau, which now finds itself barred from public contact work for a period of five years.

The firm has 5,000 employees — 3,700 of them in Quebec. What happens to them now? Dessau has a chance to contest the decision after 90 days, but how many layoffs will have already taken place?

By all means, throw the book at corrupt executives who authorized and executed the illegal transactions uncovered so far by the Charbonneau commission and the special anti-corruption police unit.

Put people in jail. Make companies repay the amounts that were stolen from the public treasury.

But in the process, let’s not side-swipe the thousands of honest men and women who work at some of Quebec’s biggest and most successful engineering firms. And let’s not deal a blow to the economy of Quebec at the same time.

That’s the risk when a firm like Dessau is banned from all public contract work because of its alleged involvement in collusion and illegal financing of political parties.

Under the anti-corruption legislation brought in by the Parti Québécois government, companies bidding for public work must first be certified by a provincial regulator, the Autorité des marches financiers.

The AMF has the power to audit companies and to refuse authorization if a company fails an ethics test.

Dessau was denied certification last week, following weeks of revelations that it was involved in illegal political financing.

Rosaire Sauriol, a senior executive who has since been arrested on corruption charges, told the Charbonneau inquiry that Dessau used false invoices to make about $2 million in donations to municipal and provincial political parties.

Apparently, this was a widespread practice among engineering and construction firms, although that doesn’t excuse Dessau’s behaviour.

Clearly, the AMF didn’t get the answers it wanted from Dessau; the agency is looking for signs that governance has changed and that corrupt practices have been cleaned up.

Some moves have indeed been made. Sauriol’s brother, Jean-Pierre, has resigned as chief executive officer. And an internal telephone number for whistleblowers has been set up.

Still, the trickle of bad news continues. Another executive, Patrice Laporte, has been named in the investigation into former Montreal mayor Michael Applebaum.

One critic of Quebec’s approach is governance expert Michel Nadeau, executive director at the Institute for the Governance of Public and Private Organizations.

“The law was not well drafted,” he says. “It was adopted in the fall of 2012 when people were in a furious mood and it was intended to punish companies.

“But corporations themselves are not guilty. It’s the top management of these companies who should be blamed, and severely.”

Look at SNC Lavalin, which has been implicated in a massive fraud at the McGill University Health Centre hospital project. How many of its thousands of employees were aware of the alleged scheming between former MUHC head Arthur Porter and the then-chief executive of SNC, Pierre Duhaime?

It’s unlikely that you would find many who were. The paper trail was carefully covered up in order to deceive even the company’s own board of directors.

“Innocent people are being affected” by Quebec’s new law, Nadeau complains. “Suppose your spouse works at a company, she did nothing wrong and she put all her savings into the company’s shares. Then, she finds out that it risks losing two-thirds of its business.”

The people at the top should pay heavily with fines, jail time and bans from the construction industry. But there are about 20 large engineering firms in Quebec employing tens of thousands of people and contributing significantly to the provincial economy.

Let’s make sure that the prescription for them isn’t worse than the ailment.

Nadeau and others at IGOPP are suggesting a formula under which firms implicated in corruption pay back significant sums of money.

That seems like a more effective sanction than a blanket ban on public construction work.

Comments

We encourage all readers to share their views on our articles and blog posts. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. If you encounter a comment that is abusive, click the "X" in the upper right corner of the comment box to report spam or abuse. We are using Facebook commenting. Visit our FAQ page for more information.